SOUTH ASIAN REGIONAL TRADE UNION COUNCILBuilding Workers’ Power

Issues Social Security

An Overview of Social Protection in SAARC Countries:

Social protection or social security is not by any means a nascent concept for most countries in South Asia. Social protection refers to a set of policies and programs designed to reduce poverty and vulnerability by promoting efficient labor markets, diminishing people exposure to risks, and enhancing their capacity to protect themselves against hazards and interruption/loss of income. Countries like India and Sri Lanka instituted social security measures soon after they gained independence in the late 1940. However, in others, like Nepal, such measures have emerged in the more recent decades. Regardless, as is evidenced by Table 2, there is an innovative array of social protection measures across countries in South Asia. This being said, the depth (amount in benefits), breadth (coverage) and efficacy of such measures still leave room for much deliberation and debate.

In fact, the Social Protection Index (SPI) of the eight South Asian countries (as a whole) is only 0.061, lowest among the regions in Asia. Most countries spend 2% or less of their GDP on social protection, the exceptions being Sri Lanka (3.2 %) and the Maldives (3.0%). This is worrisome in light of the fact that the poverty headcount ratio (at $2 per day) surpasses the percentage of population benefitting from the existing social protection programs in all of the concerned countries (with the exception of Sri Lanka) meaning that the existing social protection programs have not been successful in covering the entirety of the respective country poor population.

Table 1

Country

Social Protection Expenditure % of GDP

Coverage Â (% of total population benefitting from social protection programs)

Poverty headcount ratio at $1.25 per day (PPP)

Poverty headcount ratio at $ 2 per day (PPP)

Social Protection Index

Afghanistan

2.0

14.9 (2007)

---------------

---------------

0.046

Bangladesh

1.4

19.2 (2010)

43.3 (2010)

76.5 (2010)

0.043

Bhutan

1.2

2.4 (2007)

1.7 (2012)

12.6 (2012)

0.036

India

1.7

31.0 (2009)

32.7 (2010)

68.8 (2010)

0.051

Maldives

3.0

Â ---------------

1.5 (2005)

12.2 (2004)

0.073

Nepal

2.1

45.9 (2010)

24.8 (2010)

57.3 (2010)

0.068

Pakistan

1.3

19.1 (2010)

21.0 (2008)

60.2 (2008)

0.047

Sri Lanka

3.2

35.6 (2007)

4.1 (2010)

23.9 (2010)

0.121

Situational Analysis:

Broadly speaking, social protection can be divided further into; social insurance which is geared towards mitigating problems such as illness, unemployment, or work injury (contributory pensions, health insurance, unemployment benefits, severance payments etc.); social assistance or unrequited transfers that are commonly targeted towards the poor (cash transfer, food transfer, social pensions, disaster relief etc.); and labour market programs that seek to help people secure employment (employment schemes, skill development and training etc.).

While the SPI at large is low for South Asia, the SPI for labour market programs is relatively high (0.073) when compared to other regions in Asia. This can be attributed primarily to the commendable scale of the labour market programs in India and Bangladesh. The Indian National Rural Employment Guarantee Act 2005, which entitles an adult member from every household in poor rural regions to a minimum of 100 days of unskilled manual employment at the statutory minimum wage per year, led to the establishment of the largest public works program of its kind in the world and currently reaches approximately 52.5 million beneficiaries. Similarly, Bangladesh three major labour market programs, including Employment Generation for the Ultra- Poor, benefits over 6 million people. While other countries in this region have tried to implement similar programs (for example, National Emergency Employment Programme, 2003 in Afghanistan; Karnali Employment Programme, 2006 in Nepal), they have not nearly been as large in scale. There is a dire need for additional large-scale labour market programs as the current trends indicate that unemployment, particularly youth unemployment which was already a high 9.3 percent in 2013, will continue to increase. This is a pressing concern as an estimated 1- 1.2 million new entrants will be entering the labour market in South Asia per month for the next two decades.

In contrast, South Asian countries are devoid of social insurance programs of similar magnitudes. The SPI for social insurance, 0.069, is the lowest among the regions in Asia and the pacific. Sri Lanka is perhaps the only significant example where social insurance (i.e., pension for civil servants and private sector employees) accounts for an enormous 82% of all social protection expenditure. Although, it should be noted that only 0.9 million of the total population of 20.5 million in Sri Lanka are beneficiaries of this measure. Regardless, what truly sets Sri Lanka apart is its informal sector contributory pension scheme which, to date, has approximately 140,000 beneficiaries. In light of the fact that all countries in South Asia have predominant informal sectors (for example., 70% of employment in Pakistan is in the informal sector, 80% in Bangladesh, and 90% in India), other countries, in this region, could also benefit from instituting similar measures. The current provisions of social insurance leave those employed in the informal sector who are already subjected to multiple forms of disadvantages (i.e., low wages, lack of access to justice etc.) deprived of this particular form of social protection as well.

Similarly, social assistance in South Asia is far from being comprehensive. With a low regional social assistance SPI of 0.053, in the absence of larger overarching measures the countries in this region contain clusters of government/NGO/INGO initiated social assistance programs of varying sizes across multiple sectors. The significant measures to be noted include the old age pension programs (covers 61.9 % of the total population over 65) in the Maldives and the universal old age pension program in Nepal. As population projections indicate a trend of increase in the dependency ratios across all countries in South Asia in the upcoming decades (see Table 2 below), it is of the utmost importance that provisions for similar comprehensive measures be instituted. Further, there have been also been an array of targeted transfer programs such as the BISP in Pakistan and Samurdhi in Sri Lanka which have had varying degrees of success, particularly, due to poor target identification and/or consequent insignificant outreach. Â However, perhaps the biggest weakness in social assistance in South Asia lays in the scarcity of disaster relief programs. Although, multiple countries in South Asia are classified as being extremely prone to natural hazards, Bangladesh is the only country with a noteworthy disaster relief program.

Table 2: Dependency Ratio Projections

2010

2030

2050

Afghanistan

4.3

4.4

5.7

Bangladesh

6.1

10.4

22.3

Bhutan

7.5

10.5

22.6

India

7.7

12.2

20.2

Maldives

6.4

9.9

25.6

Nepal

6.8

8.8

15.6

Pakistan

6.9

8.9

15.0

Sri Lanka

11.4

24.9

35.0

Source: United Nations Population Division, Department of Economics and Social Welfare, World Population Prospects 2013.

Conclusion:

Although social protection measures of all kinds have been instituted in South Asian countries, there are still some major gaps and deficits that need to be addressed. The way forward should consist of a combination of steps that focus on increasing the coverage of existing programs, and measures that ensure accurate beneficiary identification as well as introduction of additional programs. There is enough evidence that indicate that the following measures would help improve social protection in South Asian countries:

As unemployment, especially among the youth is rampant, it is crucial to increase the coverage of the existing labour market programs, particularly in countries like the Maldives, Nepal (where the underemployment is high) and Afghanistan, where unemployment is particularly high. Sustaining the current GDP per capita growth will definitely help in alleviating this issue but the government needs to simultaneously also ensure that the consequent job growth is not contained to the informal sector.

Moreover, given the sheer size of the informal sectors in South Asian countries, the governments should prioritize the expansion of social insurance to the informal sectors. Perhaps, instituting measures similar to that in Sri Lanka would be good way forward. The predominance of informal sectors is indicative of bottlenecks in access to employment in the formal sectors; as such the governments would benefit from conducting further research to indentify these barriers and taking measures to abolish them.

Further, there is a dire need to expand the reach of social assistance and institute systems for more acute beneficiary identification. This is absolutely crucial as South Asia continues to hold the largest number of poor people in the world (particularly India and Bangladesh). The governments should invest in the expansion of existing provisions catering to the financial, health, and educational needs of the poor. Old age pension programs should also be given considerably more attention in light of the impeding increase in the dependency ratio in the forthcoming decades. Countries like Sri Lanka with its free education system, Maldives with its universal healthcare and Nepal with its universal old age pension serve as good examples.

Disaster relief should be a crucial component of any social assistant program. The governments should, in the least, make financial provisions for disaster relief, particularly in countries like Nepal, Bangladesh and India which are extremely prone to natural hazards. Research on chronic poverty indicates that living in areas frequented by natural disasters is a key poverty trap.

Finally, there is also a need to make provisions for the marginally non poor population who are unable to benefit from either social insurance or assistance. These groups of people are still extremely vulnerable and have so far remained out of the reach of social protection.

References:

ADB. 2013. The Social Protection Index: Assessing Results for Asia and the Pacific. Philippines: ABD.

The Social Protection Index is an indicator that was devised by the Asian Development Bank. It is derived by dividing the total expenditures on social protection by the total number of intended beneficiaries of all social protection programs. In this instance, an SPI of 0.061 in South Asia means that the total social protection expenditure (per intended beneficiary) represents only 6.1 percent of poverty-line expenditures. (ADB 2013)

ADB 2013.

World development indicators 2013.

This includes both direct and indirect beneficiaries, meaning that if one member of the household is a beneficiary them every person in the household is counted as being a beneficiary.

The Multi Hazard rating for India is 35, Bangladesh and Nepal is 34, Pakistan is 30 and Sri Lanka is 28. This is based on a scale of 35, with 35 meaning that the country is most prone to facing multiple natural hazards. (ODI 2013).